What’s better? Giving to family or giving to others?

During this holiday season, we shopped for gifts for family and friends and made year-end contributions to charities. This concept of giving is intriguing. When giving thanks takes on a monetary aspect, how and to whom can call for a little forethought. “Giving” is part of a much larger conversation.

Figuring out viable options for gifts brings factors into play:

What elements affect whether you give money to your family?

Do you have a defined goal and target for charitable giving?

Are you facing tax implications that could influence your giving decisions?

Family giving includes money that is given throughout your life, as well as money set aside to be left as an inheritance.

The easiest topic to lock down is money left as an inheritance, as it has likely come up and been defined in conversations with your financial advisor. Beyond that, we all have stories we tell ourselves about what it means to inherit money. And those stories are usually full with emotion.

Money is rife with emotion, even in death. Still, it needs to be part of your estate planning.

But what about family giving in life? Guidelines of how and when money is given are best when followed consistently from early childhood. How you actually act – not what you say – is what will establish expectations among your offspring and heirs.

While defining a strategy later in the game can be difficult, it is still worthwhile to minimize arguments or long faces at each life event that requires money.

Family giving in life is probably the cause of the greatest manipulating, guilt-enhancing, guilt-assuaging or you-love-him-more-than-me arguments your family will ever experience.

Add to that the volatility that comes with any changed life circumstance: a divorce, the death of a parent or a loss of income. Suddenly, even what seemed clear cut starts getting fuzzy. Ignore at your own peril the task of thinking through your “family giving in life” strategies.

Charitable giving is far less emotional. When so many subjects are verboten at family gatherings, bringing the family together to discuss charitable giving provides the perfect opportunity to identify your shared values and to start a new annual tradition.

Your children’s young age is not a problem. In fact, the younger they are involved in the practice of giving back, the better. They can help the family pick a specific passion to support, as well as select individual charities.

Are you avid campers who support environmental issues?

Do you volunteer as a family and want to contribute to children’s hospitals or community outreach?

Has an illness touched your family in a way that inspires donations to a particular cause?

Where would your family like to make a mark?

Once defined, philanthropy is a meaningful way that families can pass along their shared values and beliefs, creating a powerful bond in the process.

How much will be donated will likely be decided in advance in the context of the family’s overall finances, perhaps with the help of a financial advisor. However, giving both young and old a voice in allocating those funds – especially around the holidays – uniquely warms everyone’s heart. Good things come to families that give.

Sometimes practical aspects like taxes play a role in giving decisions. When the Tax Cuts and Jobs Act (TCJA) of 2017 doubled the size of the standard deduction and limited other deductions, the number of taxpayers itemizing deductions will drop dramatically. For many, the motivation to give to charity dropped, too. However, some strategies still exist.

In one, taxpayers add together or “bunch” the donations of a few years and make them all in one year to maximize their deductibility by exceeding the new standard deduction.

In another, taxpayers over age 70 1/2 use “qualified charitable distributions” (QCDs) with direct transfers to charities from IRA balances of up to $100,000 each year and access extra tax benefits in the process.

Lastly, donors use “donor-advised funds” for lumped contributions, which can also include appreciated non-cash assets (which avoids the tax on gains). Immediate tax deductions can be taken against the full irrevocable contribution, with no payout time requirement. Meanwhile, funds can be invested while awaiting distribution.

Obviously, a good financial advisor can help you get the most significant bang for the buck when you want to contribute. As St. Francis of Assisi stated, “For it is in the giving that we receive.”

Was this helpful?

Join the hundredsof subscribers who agree.

Get access to content like this and more by adding your name.

Our award-winning newsletter helps people see their future as greater than their past. Sign up for exclusive content, the latest trends, and actionable next steps.

Newsletter Sign Up

For over two decades, WH Cornerstone Investments, Inc. has helped build the wealth and secure the financial foundations for clients throughout the United States.

Our years in the industry have shown us many things. One thing we know for sure is life throws many curve balls. It’s why our firm is passionate about empowering people to see their future as greater than their past, especially in times of transition.

The death of a spouse, a divorce or even retirement can feel like insurmountable challenges. WH Cornerstone Investments, Inc. is there with a plan of action and a way to rebuild your financial (and personal) life. It’s truly our higher purpose.

W.H. Cornerstone Investments, Inc. (“WH Cornerstone”) is a registered investment adviser offering advisory services in the state of Massachusetts and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. The presence of this website on the Internet shall not be directly or indirectly interpreted as a solicitation of investment advisory services to persons of another jurisdiction unless otherwise permitted by statute. Follow-up or individualized responses to consumers in a particular state by WH Cornerstone in the rendering of personalized investment advice for compensation shall not be made without our first complying with jurisdiction requirements or pursuant an applicable state exemption.

All written content on this site is for information purposes only. Opinions expressed herein are solely those of WH Cornerstone, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties' informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.

All investing involves risk, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful.